Asset and wealth management are financial services. This is how Asset and Wealth management works I represent the Asset Management function of a bank and this is my sports team.
They represent the client, a large company or corporation The Asset Management part of a bank is responsible for helping the client grow an existing pot of money.
Similarly, the sports team are trying to increase their membership and I’m going to advise them on how to do it Just like, how an Asset Manager advises the client on how to grow their money In this example, let’s imagine that the sports team’s members represent the client’s money.
We’ve just got to get more people interested in playing You two go to the union I’m sure you’ll find loads of people to chat to there And why don’t you two hit the gym with some flyers? And you’ll find lots of people that are keen.
Nice, let’s get it So, I’ve helped the team use what they already have their membership to go out and get some more players for the team This is just like when a bank takes a client’s money and uses it to grow their existing assets Let me tell you how Wealth Management works.
We work with private clients, who are wealthy individuals and advise them on how to reach their financial goals So this is Jess. Jess is one of my clients and she just so happens to be in charge of the funding of the team I need to use the money that we already have and make more of it so that we can buy new kit for the team.
This is my budget Okay, so it’s my job to help Jess take the money she’s already got and grow her pot, whilst advising her on the risks I think you should do a fundraising match We could either do it down at local pitch, it’ll be a lot cheaper we can generate a buzz and potentially get some people really interested in joining or signing up Or, we could hire the uni stadium.
Now, this is really going to eat into the budget and you’re going to have sell lot more tickets but the return on investment could mean that maybe you could buy your team a new kit and new equipment Okay, let’s do it. Go hard or go home and all that Oh that was wicked.
What is Asset Management?
Now let us understand the meaning of an Asset Management Company (AMC) in this regard. So while we have discussed research on one side, we said that the research may have different kinds of clients. One could be the individual investors, the other one could be institutional investors and Asset Management Companies can be classified as one of the institutional investors.
So what do they exactly do? So institutional investors like Asset Management Company what they do is they basically invest pooled funds of clients into various securities. Securities can be bond securities or company based securities i.e. stock equity-based securities.
So Asset Management Company essentially collects money from the public and makes it a pool of funds. So maybe a $100 million fund or maybe 200 million or a multi-billion fund. So depending on the size of the Mandate they invest the pooled funds of clients into various securities and an example could be an Asset Management Company could be like a Mutual Fund.
So a Mutual Fund that invests in technology stocks. So obviously you and me as an investor invest in a Mutual Fund of one of the companies that Mutual Fund will be managed by a portfolio manager here. So there is a portfolio manager who directs these pooled funds into various securities. So let’s see what this job is all about you know how do they make money? They make money by actually you know taking a commission or fees depending on the size of the fund that they are managing.
So if it is 100 million funds for example, management fee may be around 2% – 3% of the overall asset under management or AUM. So that’s how the asset management companies make money and the manager who manages the investments or takes investment decisions is called a portfolio manager or a fund manager ok and the important part of this Asset Management or the Asset Management Companies is that they provide lot of diversification because they have larger pool of resources as compare to the individual investors.
So I may invest in only Microsoft or may be Google but You know the Mutual Funds who invest into technology stocks may provide more diversification because they have larger funds to invest across domains and they are professionals, they can do lot of risk return analysis and kind of diversify their large portfolio which will in return ultimately mitigate my investment in the Mutual Fund. So that’s how basically the Asset Management Company actually works.
What is Wealth Management?
wealth management is about fully utilizing the wealth that you have accumulated by putting that money into investments and utilizing tax benefits as much as possible.
Wealth Management is a part of financial planning. But it’s for those that are already confident in their financial structures and want their money and investments to generate a better return than leaving it on deposit. Wealth Management generates a better return for you then leaving money in the bank.
The value of your wealth decreases over time, even if you don’t touch it due to service fees and inflation. Look at the low interest rate for a deposit account compared to the inflation rate and then look at the taxes on any interest generated.
- Tax planning
- Education planning
- Legacy planning
- Estate planning
- Charitable giving
- Retirement planning
Asset management vs wealth management career
Asset management vs wealth management salary
|Job Title||Educational Requirements||Median Salary (2021)*||Job Outlook (2030-2030)**|
|Asset Manager||Bachelor’s degree||$71,936||6% (financial analysts)|
|Investment Manager||Bachelor’s degree||$100,320||6% (financial analysts)|
|Type Management||Salary Average||Bonus Average||Total compensation|
Difference between asset management and investment management
|Asset Management||Investment Management|
|Job responsibilities of an asset manager include:|
Evaluating market factors
Identifying investment opportunities
Producing projects of returns from investments
Communicating to clients about investments
|Job responsibilities of an investment manager include:|
Clarifying goals for a client’s portfolio
Determining which investments to buy
Evaluating economic factors
Preparing reports for clients
Changing investments if options underperform
|Asset management is the management of assets including real estate, stocks, bonds, etc.||Investment management is more related to the trade of stocks and bonds and other types of investment vehicles in order to make a profit and grow investor’s I-1 wealth.|
Difference between wealth management and investment management
|Wealth management||Investment management|
|A financial management service wherein investment managers advise the clients in their investments and often trade and rebalance the portfolio on their behalf.||A holistic approach involves, various different solutions aimed at identifying goals, investing, managing, and growing the client’s wealth|
|Available to everyone||Only for the high net worth individuals|
|Narrow approach||An integrated and broad approach|
Difference between asset management and portfolio management
Wealth management. Alternative investment. Derivatives library. Execution and order management. Private equity. Compliance.. Asset managers do manage portfolios. However, unlike dedicated portfolio managers, asset managers also can manage cash and other tangible physical assets like land, property, and items of value. Like an asset manager, a portfolio manager handles your investments and other financial products that make up your portfolio.
Difference between asset management and investment banking
|Investment Banking||Asset management|
|• Investment banking services are focused on large companies or entities.|
• No place for individuals.
|• services are also offered to individuals with high net worth.|